Sun shines on the Street

Commentary: SIA heads south to find direction

BOCA RATON, Fla. (MarketWatch) - It's that time of year when Wall Street heads south, down to Florida for the industry's annual conference.

There are certainly better places to gauge the year for the securities industry - a corner stool at the Bull & Bear comes to mind -- but for regular attendees, the Securities Industry Association's annual blowout in sunny, warm Florida offers the most recreational environment.

This year's conference, which kicks into full gear Thursday, is no different. What in the boom days of a roaring stock market high on Internet stocks was a bacchanalia of excess, is now a muted, smaller gathering that offers a little introspection, a little strategizing and, of course, a little golf.

SIA has been gathering annually for 34 years, but it's hard to believe the event ever changed as much as it has in the past 10 years.

Out went the late night open bars and nocturnal road trips to South Beach. In came the weighty discussions on how the industry could regain trust with investors and how small firms would manage the compliance burden.

Once a three-day blur of ice sculptures, top flight entertainment and a parade of the industry's heaviest hitters, the meet has given way in the past few years to a compact day of message making by regulators and industry scolds.

Tony Bennett has left the resort.

The SIA itself has responded to the regulatory crackdown and market tumble that followed 9/11 by ramping up its investor education drives and diversity initiatives. Eliot Spitzer never made an appearance here, but he changed the mission, scope and character of the meeting like no one else.

One only needed to stand in the exhibit area to see that. Where once vendors touted stock trading tools and the latest market-tracking gizmos, now there are salesmen hawking the latest compliance software.

Last year, the pendulum had swung so far that the industry was besieged by caustic speeches by Securities and Exchange Commission Chairman William Donaldson and the NASD chief Bob Glauber, who upbraided the audience by reminding them that the organization was not a trade group but an enforcement agency.

Regulatory chieftains -- and this year new SEC chief Christopher Cox is here to do the honors -- are also speaking to smaller audience. It's not that the industry is shrinking, rather, consolidation has changed the size of the event much to the chagrin of the Boca Raton Resort and its $400-a-night rates. As a result, the meeting has a much tighter, scaled down feel.

The faces are changing too. Fifteen, even 10 years ago, who would have thought that a commercial banker would be serving as chairman of the SIA as Wachovia Corp.'s
WB, -0.93%
Daniel Ludeman did this most recent year.

"The last few years have brought significant change to the industry, but our transformation is not yet complete," Ludeman said.

Times are indeed changing. True, there are still whiffs of scandals about. Credit Suisse First Boston is being probed over Refco
RFXCQ
The Bank of New York is settling concerns about money laundering -- just to use the day's headlines as an example.

But the forces that shaped this event in recent years are receding. Attorneys general are seeking higher offices. Manual auction markets which once despised electronic communications networks are joining them. The Dow Jones Industrial Average is firmly planted above 10,000. Bonuses are back with a vengeance.

One need only look at John Thain and the changes at the NYSE. In two years, it's ousted its chairman, dissolved its board, rewritten its bylaws, agreed to merge with an electronic competitor, split off (almost) its regulatory arm and set plans to become publicly traded.

So it seems there is a new era for the industry. The theme of this year's retreat is "Creating Opportunities" which is an optimistic way of looking at it. But it also is vague enough to suggest that the industry is at a crossroads.

With 1,000 new SEC agents patrolling the street and Sarbanes-Oxley keeping an eye on corporate America, the industry seems to have found a way to keep making money. Just look at the most recent quarters for Goldman Sachs Group Inc.
GS, -0.73%
and Lehman Brothers
LEH
or the price of a seat on the NYSE. The industry is on pace to do $314 billion in business this year, according to association estimates. Weren't these guys supposed to wither away?

It's tempting to be cynical and say that all of this is just the industry laying low until the last of the negative winds blow over. On the other hand, perhaps the new age being ushered in will be one in which investors are a little more savvy, bankers are a little more ethical, Wall Street is a little more female and minority friendly and everyone will feel a little bit better knowing that win or lose, the game got a little bit fairer.

Let's hope its happening and we're not just crazy from the Florida heat.

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